ECONOMICS

Detailed explanation-1: -In a process costing system, units transferred to the next processing department are presumed to be 100% complete with respect to the work performed by the transferring department. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 6.

Detailed explanation-2: -Transferred in costs are costs that have been incurred in a prior department on units that have been moved into a subsequent department. They normally include materials, labor and overhead. This normally occurs when a manufacturing company has different processing department in their production.

Detailed explanation-3: -The correct answer is b. A process cost system has one work in process account for each department. Process cost system has multiple departments or processes, so its work in process inventory account has the same number of processes or departments in order to accumulate the product costs incurred for each process.

Detailed explanation-4: -To calculate the goods transferred out, simply take the units transferred out times the sum of the two equivalent unit costs (materials and conversion) because all items transferred to the next department are complete with respect to materials and conversion, so each unit brings all its costs.

Detailed explanation-5: -Materials, labor, and/or manufacturing overhead can be added in any processing department. Transferred in costs are accounting for as direct materials, direct labor and overhead. Units are always 100% complete for transferred in costs.